Bridgestone Tyres

Bridgestone Tyres

European marketing strategy

It is a lovely spring morning in central Tokyo in 1996. Although the city is just awakening

with all its noise and stress, it does not bother the president of Bridgestone Corporation,

Yoichiro Kaizaki, as he is on his way to work. The Annual Report 1995 for Bridgestone has

just been publicized, and shows an increase in net earnings of nearly 70 per cent

(compared to 1994), a record level of '154 billion (US$526 million).

The prospects look good. On his way into his office, Yoichlro Kaizaki asks his assistant

to give him a copy of Bridgestone's 1995 market shares in the most important tyre markets

in the world. Yoichiro is having a meeting with the board of directors the next day. Here

they will discuss Bridgestone's strategies in Europe, Asia and North America.

The market shares are shown in Table 1. Together with Goodyear and Michelin,

Bridgestone is among the world's largest manufacturers of tyres. (Figure 1, plate 3 shows a

photograph of Bridgestone tyres.) But it has a comparatively law market share and law

brand awareness in Europe. The question for Yoichiro Kaizaki is: how can Bridgestone

increase its market share for tyres in Europe? The following is a concentrated report on the

market conditions for tyres in Europe.

The European tvre market

The European market for car tyres (including commerciai vehicles) fell slightly from 1992 to

1994, but in the past two years the market has risen again, primarily due to increasing car

sales. Competition among tyre producers is very heavy and tyre prices in real terms have

fallen over the last few years.

In 1994 the total European market for tyres was 229.8 million tyres, which corresponds

to a value of same DKK70 bill ion (in ex works prices). A breakdown of the total market is

shown in Table 2. This table shows sales of new tyres for entirely new cars (= new sales) or

as replacement of worn-down tyres (= replacement sales). Table 3 shows the total

European tyre market broken down into countries, together with the market shares of the

most important producers in the individual markets. On the basis of Table 3 the Boston

Consulting Group (BCG) charts of the individual producers have been prepared (Figure 2).

In this connection, it should be noted that the areas of the circles show total sales in the

respective countries and not the sales of the individual companies in the markets in

question, which is normally the c~se in BCG charts.

Table 1 Bridgestone's market share for tyres in the most

important markets, 1995

Market area Bridgestone market share (%)

Asia 29

Europe 8

USA 22

World total 19

92 .The decision whether to internationalize

Table 2 The European tvre market, 1994

Million units Car tyres . Truck tyres Total

New sales 65.4 9.3 74.7

Replacement sales 131.8 23.3 155.1

Total 197.2 32.6 229.8

Table 3 The European market for tyres (cars and trucks)

France Germany Italy Spain UK Other markets Total

Milli"n Ilni+c

New sales 13.2 22.7 7.0 9.1 8.7 14.0 74.7

Replacement sales 24.2 36.7 15.8 8.9 22.0 47.5 155.1

Total 37.4 59.4 22.8 18.0 30.7 61.5 229.8

Producers' market shares (%)

Michelin 55 24 31 44 30 - 35.1

Continental 4 26 8 7 13 - 14.4

Goodyear 7 16 11 4 16 - 11.3

Pirelli 5 6 23 13 11 - 10.4

SP (Dunlop) 10 10 4 4 14 - 8.9

Bridgestone/ 7 5 8 18 7 - 7.2

Firestone

Others 12 13 15 10 9 - 12.7

Total 100 100 100 100 100 - 100.0

Note: 'Other markets' include eastern Europe and Scandinavia, for which market

shares are not available.

Retreaded tyres

So far the markets have been described on the assumption that only production and sales of new tyres

were involved. For many years, consumers have considered the retreaded tyre one of low price and

law quality.